Commencement of Business

MCA has vide the Companies Ordinance 2019 which has been promulgated on 14th January, 2019 introduced a new section 10A in the Companies Act, 2013 which requires that every company incorporated after the above date and having share capital shall not commence business nor exercise its borrowing powers unless it has filed a declaration within 180 days from the date of incorporation and also filed document pertaining to its registered office.

There is the penalty of Rs.50,000 on the company and Rs.1000 per day on each officer in default subject to a maximum of Rs.100,000/-

Where the aforesaid declaration has not been filed within 180 days of the date of incorporation, then the Registrar may, where he is of the opinion, that the company is not carrying on any business or operations, start proceedings to remove the name of the company from its records. Of course the penalty clause will still be applicable.

Form INC-20A is the form which has been introduced by the MCA and the only mandatory documentation required is the proof that the subscriber has paid in his subscription money for the value of shares which he has agreed to subscribe via the memorandum of association. A copy of the cheque issued by the subscriber and a copy of the bank statement showing the credit in the company's bank account should suffice for the purpose. Which also means that the bank account can be opened by the company but actual business like invoicing etc. cannot commence until this declaration has been filed.

Originally this provision was introduced vide Companies Amendment Ordinance 2018 w.e.f  2nd November, 2018 but this 2019 Ordinance replaces the old one.

So one more compliance for a company after its incorporation in India. 

The $100 Start Up

Just finished reading "$100 start up" by Chris Guillebeau - this guy is a successful serial micro entrepreneur and the book has lots of insights on building a business with very little investment, as low as $100 or even less. All it requires is ideas, a solid product, which people want and which gives value to people. So there should be a want and it should carry value. He takes the reader through the entire process of building a small business with examples from various such micropreneurs who have successfully built their businesses. Its an online world so all it takes is passion with a desire to build business. Some cases are accidental in the sense that people study for one thing, they have passion in another area and it is a cross between choosing a boring day job or pursuing your passion. Highly recommended for would be micro entrepreneurs. Goodreads 3/5

Online IEC application

From 1st January, 2015 all IEC (Importer Exporter Code) applications have to be made online. The Ministry of Commerce has laid down some procedural guidelines vide their circular dated 31st December, 2014. Some salient features of the guidelines are given in the Dept circular no. 15 dated 31st December, 2014 followed by another circular no. 17 dated 30th January, 2015

Part A: General Information:

1.      From 1.1.2015, all applications for IEC would be made in online mode only. All applicants will have to fill IEC application and also upload all required documents online.

2.      All IEC Certificates would also be issued by the concerned RA (with his digital signature) in digital format only. The applicant can take a print out of the digitally signed IEC, as and when required.

3.      Applicants with digital signatures would sign the application with their digital signature and submit the same online.

4.      In case the applicant does not possess digital signature, then he would be required to take a print out of the filled up application (without attachments), sign the same and submit it to the concerned RA, either by Post or at the counter.

5.      All applications must be processed and disposed within two working days of their receipt.

6.      RAs would record their observations with reference to the application, based on which either an e-IEC or a rejection letter, along with the reasons for rejection, would be issued. RA would also print the office note generated by the system on the application received for their office record.

7.      There is no provision for issue of deficiency letter in the new system. If the IEC application is rejected, the applicant would be required to file a fresh application.

8.      The authorised officer (not below the rank of FTDO) in the Regional Authorities (RAs) as in Appendix 1 of Handbook of Procedure (vol.1) (2009-2014) will be the competent authority to issue/reject applications for IEC.

Part B: What to Examine/Verify:

1.      Applicant entity’s details:

a)         In case of Proprietorship firms: To verify Name, Date of Birth and PAN, as filled in the application form and as mentioned in the uploaded PAN, from the website of Income Tax Department.

b)         In case of  Partnership firms : 

                                                        i.            To verify Name, Date of Incorporation and PAN of the entity, as filled in the application form and as mentioned in the uploaded PAN, from the website of Income Tax Department.

                                                      ii.            To verify Name, Date of Birth and PAN of the Partners as filled in the application form, from the website of Income Tax Department.

c)         In case the entity is Limited Liability Partnership/ Private/ Public/Govt. Undertaking / Section 25 Company:

                                                     i.               To verify Name, Date of incorporation and PAN of the entity, as filled in the application form and as mentioned in the uploaded PAN, from the website of Income Tax Department.

                                                   ii.               To verify and cross-check the number, names and other details of Partners/Directors from the LLPIN/CIN information available on the Ministry of Corporate Affair’s website.

d)            In case the entity is  a Registered Society/Trust or a HUF:

To verify Name, Date of incorporation and PAN of the Society/Trust as filled in the application form and as mentioned in the uploaded PAN, from the website of Income Tax Department.

2.     Applicant entity’s address verification: To verify the applicant entity’s address  cross-check the address as indicated in Part A (ii)  with that of the address as mentioned in the Sale deed (in case business premises is self-owned); or Rental / Lease Agreement (in case office space is rented/ leased); or  latest electricity /telephone bill.

3.    Verification of the bank details of the applicant entity: Name of the Account Holder, Account number, Bank’s name and Branch and IFS code as filled in by the applicant in Part A (viii) needs to be cross-checked from the cancelled cheque/ bank certificate as uploaded.

Part C: Procedure for verification of details from websites by RAs:

·         RAs can cross-check and verify Applicant entity's Name, Date of Birth/Date of Incorporation, PAN of the entity from the link as below:

https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourPanLink.html

 

·         The LLPIN/CIN details of the Firm/Company may similarly be cross verified from the Ministry of Corporate Affair’s website: http://www.mca.gov.in/MCA21/Master_data.html , by taking the steps listed therein.